How did Q3 pan out? Post Q3 will you take another look at your goals for the rest of FY18? There are lots of bookings. How are the execution trends looking for now?

The third quarter, both from bookings and execution perspective, was a very strong quarter for the company. On the bookings front, we had the highest-ever quarterly sales with an area of about 2.8 million square feet sold and residential booking value in excess of Rs 1,500 crore for the first time. Both of those were the best numbers that the company has achieved.

On the execution side, we have delivered space of about 1.7 million square feet across four cities. So again, it is a very strong quarter for deliveries as well. Overall there is good momentum heading into the last quarter of the financial year.

What is the outlook for the rest of 2019? How are you looking at the realty market?

We do not typically publish any guidance and so there is no revisions as such, But we were confident of scaling up bookings performance. We actually had a fairly disappointing first half to the financial year. Some of the launches that we had planned got delayed. Some of those have actually gotten launched in the third quarter. We are happy to see renewed momentum in the booking space and hope to close the year with the bang in the fourth quarter.

Overall, the sector has been going through very challenging times. There has been a downturn that is now in its 7th or 8th year, depending on which market you look at. My own sense is that the sector will rebound strongly. The exact timing of that rebound is harder to predict, but all the factors that need to be in place for the real estate sector to do well, are actually in place.

The Indian economy is growing reasonably well. Major trends like urbanisation continue to be very favourable for the sector. Demographic changes that you are seeing in the country continue to unfold in a way that is favourable to the generation of more nuclear families which again is very beneficial for the residential real estate sector.

One of the very important factors that was holding real estate sector back was affordability. It has corrected to a significant degree over the last five years. In the last five years, interest rates have been reduced by about 300 bps. Many customers or potential buyers’ incomes have grown 30% to 50% over those five years. Property prices remained flat or in some cases like in the NCR market actually declined. The cumulative effect of those interest rate changes, people’s income growing and a stagnation in property prices has dramatically improved affordability for residential real estate in India.

We probably would have seen a recovery had we not had some of the recent shocks like the NBFC liquidity issue, demonetisation, GST and RERA rollout etc. Many of these were very good for the economy over the medium to long term, but created short-term pressure and delayed potential recovery.

It is more likely than not that in the second half of this year or in 2020, we will see a strong rebound for the sector. As a company, we are trying to make sure that we are well positioned for that recovery by investing now when we are seeing a lot of attractive opportunities for business development.

What is the pricing trend across the country given the backdrop of weak real estate market. Do you see demand and pricing revive going forward or would that continue to be in a slumber for some more time?

Prices across the country have been broadly flattish. There are exceptions in both directions, but pricing movement in residual real estate over the last two or three years has been quite flattish. Reasonable pricing is an important ingredient to bolstering demand. That said, we tend to see both move together.

Once you see demand coming back, you probably will also start seeing pricing move up a little bit. But I certainly hope from a customer standpoint as well as from the long-term benefit of the sector that the next upcycle in the sector is witnessed more through volumes than pricing.

There is a buzz about a cut in GST in real estate space as well. How does it impact the realty space overall?

Well of course we will have to see what actually comes about. The government needs to look at not just GST, but the overall taxation environment for the sector in a holistic manner. When you have GST at 12%, you have stamp duty in many cities at 6% and municipal taxes of a considerable nature. All of this adds up to a taxation environment that makes the creation of affordable housing in cities like Mumbai very challenging.

The government needs to ensure that it is striking the appropriate balance between revenue generation from the sector and ensuring growth of the sector which benefits all stakeholders including consumers.

It also can have transformational benefits for economic growth in the country given the number of ancillary industries like steel, cement, paint, tiles and so on that depend on the construction in real estate sectors. Last but not least, there is a huge opportunity to drive job creations through the creation of construction jobs which are often reported as being the largest sources of jobs in India after agricultural jobs.

For all of these reasons, the government needs to focus on ensuring the facilitation of growth in the sector and balance its revenue generation goals with these equally important goals.

Would you consider potential acquisitions of weaker players given the opportunity that is presenting itself?

We believe the Godrej brand gives us a tremendous opportunity to successfully enter new markets. We have demonstrated that we will believe by establishing leadership or near leadership positions across the four focussed markets that we are operating in. We also agree that the joint venture strategy of partnerships has facilitated more rapid growth than we could have probably achieved through outright purchases by allowing us to add more projects in as capital efficient manner as possible.

That said, the choice of structuring for new land acquisitions is really a strategic and financial choice, driven by what we think will allow us to generate the best possible returns for the company. If we start seeing land valuations at distressed values where we can add a lot of value despite investing the capital in the land, we have no reason not to do so. It is again a pure value maximisation strategy. If the underlying facts change, the value maximisation strategy could also change.

Godrej Fund Management (GFM) and Godrej Properties have entered into a joint venture agreement with Hero Cycles to develop a prime office space on the Golf Course Road in Gurgaon. How is this JV going to work?

This is a very exciting opportunity. This is one of the best land parcels in all of NCR. It is a four-acre piece of land right on the Golf Course Road, next to the metro station and very high-end residential, commercial and retail real estate space. So it is one of the most desirable locations in the country. We are quite excited to be developing this project and the goal will be to really create an outstanding project that we hope can become a landmark for the region as well as for us as a developer in that market. It is at a very early stage. We have just concluded the transaction in the third quarter and are now in the process of designing that project. We will then go through regulatory approvals and then construction and launch stages.